Sande Corporation makes a product with the following standard costs: In November the company's budgeted production was 2,900 units but the actual production was 3,000 units. The company used 27,670 grams of the direct material and 1,390 direct labor-hours to produce this output. During the month, the company purchased 31,700 grams of the direct material at a cost of $196,540. The actual direct labor cost was $29,607 and the actual variable overhead cost was $2,502.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The labor efficiency variance for November is:
A)$2,530 U
B)$2,530 F
C)$2,343 F
D)$2,343 U

Question

Sande Corporation makes a product with the following standard costs:

In November the company's budgeted production was 2,900 units but the actual production was 3,000 units. The company used 27,670 grams of the direct material and 1,390 direct labor-hours to produce this output. During the month, the company purchased 31,700 grams of the direct material at a cost of $196,540. The actual direct labor cost was $29,607 and the actual variable overhead cost was $2,502.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The labor efficiency variance for November is:

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. 
-The labor efficiency variance for November is:
A)$2,530 U 
B)$2,530 F 
C)$2,343 F 
D)$2,343 U

Quizplus · Accepted Answer

SH = 3,000 units F1F1F1S1F1F1F10 0.5 hours per unit = 1,500 hours
Variable overhead efficiency variance = (AH - SH)SR
= (1,390 hours - 1,500 hours)$23.00 per hour
= (110 hours)$23.00 per hour = $2,530 F

Sande Corporation Makes a Product with the Following Standard Costs